There are No New Rules when it Comes to First Time Home Buyers

Like one of my favorite bloggers out there, Bad Money Advice, I don’t really get all these “new” rules that are popping up everywhere.  I don’t believe the “its different” today BS.  I think most of the lists, at best, basically just rehash of old rules that I thought always existed (obviously, minus the past 7 to 9 years) or at worst provide Personal Finance Rules, which shouldn’t be set in stone.

I came across another one of these articles titled, “Seven New Rules for the First-Time Home Buyers” written by Ron Lieber.   Mr. Lieber’s rules aren’t wrong, per se, but I don’t feel like they are groundbreaking or new

  1. Start with the Basics – Put down 20%, Don’t Spend more than 35% of pretax income on mortgage or 45% if we add in stuff like taxes and insurance;
  2. Consider your income – Don’t suffer from income overconfidence where you assume you’ll be making triple your income in 5 years;
  3. Bow to Unknowns – make sure when you are buying realize your life changes (kids, unemployment);
  4. Map out Expenses – to budget is new?
  5. Buy Best – Either buy your dream home or a starter house, but nothing in the middle
  6. Stretch your House
  7. Eight Hour Rule – Sleep on every decision

Like I said, Mr. Lieber’s article isn’t wrong but these rules aren’t knew anyone who didn’t follow them over the past 10 years are probably in foreclosure or will be foreclosure in the upcoming years.

2 Responses to There are No New Rules when it Comes to First Time Home Buyers

  1. Rachelle says:

    Although the tips are recycled, I continue to read them as often as they are published. I’m not planning on buying a house for another 2-3 years, but I always want to have those rules in mind for the big day. However, I wasn’t aware of the “no more than 35% of your pretax income” or the “buy the best” rules. I’ll just add them to my list of things to keep in mind…

  2. My Journey says:

    I had never heard the best thing either, and I am not even sure I agree with it. I think the 35% is great advice that people rarely follow.

Leave a reply